On June 1, 2023, JetCom Inventors Inc. issued a $540,000, 12%, three-year bond. Interest is to be paid semiannually beginning December 1, 2023.

Required

a. Calculate the issue price of the bond assuming a market interest rate of 13%.

b. Using the effective interest method, prepare an amortization schedule similar to Exhibit 14.11.

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Period Ending Dec. 31/23 Jun. 30/24 Dec. 31/24 Jun. 30/25 Dec. 31/25 Jun. 30/26 Dec. 31/26 (A) (B) Cash Interest Paid $100,000 x 4% Period Interest Expense E x 5% $ 4,000 4,000 4,000 4,000 4,000 4,000 $24,000 $4,7461 4,7832 4,823 4,864 4,907 4,9543 $29,077 (C) Discount Amort. B-A $ 746 783 823 864 907 954 $5,077 (D) (E) Discount Unamortized Carrying Value $100,000 - (D) $5,077 4,331 3,548 2,725 1,861 954 -0- $ 94,923 95,669 96,452 97,275 98,139 99,046 100,000